Oversea-Chinese Banking Corp. agreed to pay about $320 million for Barclays Plc’s wealth and investment-management business in Asia, beating out DBS Group Holdings Ltd. in the bidding.
OCBC’s private banking unit, Bank of Singapore, will use cash to fund the purchase, the Singapore-based lender said Thursday in a statement. The price is indicative, based on Barclays’s assets under management of $18.3 billion in Hong Kong and Singapore, OCBC said.
The acquisition will deepen OCBC’s presence in its core markets of Singapore, Malaysia, Indonesia and Greater China, it said. Asia’s growing wealth has attracted Swiss and U.S. lenders to Singapore, seeking business in serving rich individuals. London-based Barclays is shifting its focus to the U.S. and its home market.
“OCBC’s win is a positive for them, firmly rooting themselves as a leading Asian name alongside DBS, and pads up an additional, stable income stream,” Kevin Kwek, a banking analyst at Sanford C. Bernstein & Co. in Singapore, said in an e-mailed reply to questions. “Price paid is also on the reasonable side, although we don’t yet have visibility of exactly what they are getting.”
DBS, also based in Singapore, had submitted a non-binding bid for the Barclays unit, according to people familiar with the process.
The estimated $320 million price represents 1.75 percent of Barclays’s assets under management in Singapore and Hong Kong, OCBC said. That compares with the 5.8 percent of assets it paid for ING Groep NV’s Asian wealth business in 2009.
OCBC shares rose 0.9 percent to S$8.80 as of 11:55 a.m. in Singapore, erasing their decline this year and exceeding the 0.2 percent gain in the benchmark Straits Times Index.
Bank of Singapore’s assets under management were $55 billion as of Dec. 31, filings show. Following the acquisition, the total will grow to $73.3 billion, according to the statement. The lender will have 400 relationship managers, who recruit clients and sell services.
That will also bring the unit’s size closer to DBS, Singapore’s largest wealth manager with private banking assets of $75 billion at the end of 2015, according to Asian Private Banker. Wealth management is a “strategically important” business for OCBC, Chief Executive Officer Samuel Tsien said in the statement.
United Overseas Bank Ltd., another Singapore-based lender, had considered bidding for the Barclays unit, people familiar with the matter said earlier.
DBS ranks sixth among Asia’s largest private banks in terms of assets under management, according to Asian Private Banker. Zurich-based UBS Group AG is No. 1.
“We are always interested in any wealth platform, but at what we think is a reasonable price,” DBS Chief Executive Officer Piyush Gupta told Bloomberg on March 29.
Client assets at UOB’s wealth-management unit rose 12 percent to S$85 billion in 2015 from a year earlier, according to a company document. The bank didn’t provide a breakdown on its private banking.
The Singaporean banks have profited from using their wealth platforms for services such as distributing products for insurance companies and selling bonds to private-banking clients, collecting fees in the process. The companies also derive interest income from lending to wealthy customers.
OCBC’s wealth-management business includes the private-banking arm, the Great Eastern Holdings life insurance unit, the Lion Global Investors asset-management division, and a brokerage business. Income from these operations increased 6 percent last year to S$2.35 billion, accounting for 27 percent of the bank’s total income, OCBC said.
Bank of Singapore was created after OCBC bought Amsterdam-based ING Groep NV’s Asian private-banking unit for $1.45 billion in 2010.